THE IMPACT OF REGULATION ON NIGERIA INSURANCE COMPANIES
CHAPTER ONE
INTRODUCTION
1.1.BACKGROUND TO THE STUDY
Insurance as a concept has economic, sociological and legal dimensions that make it difficult to define from the prism of one viewpoint. To the lawyer, insurance is a contract whereby a person called the insurer or assurer, agrees in consideration of money called the premium paid to him by another person, called the insured or the assured, to indemnify the latter against loss resulting to him on the happening of certain events. To the economist, on the other hand, insurance is a device for the transfer of some economic loss from the insured who otherwise would have borne the risk, to an insurer in return for a premium. To the sociologist, insurance is viewed as a device whereby the participants provide financial compensation or succour to those among them encountering the many misfortunes or contingencies that befall humanity. From whatever perspective insurance is viewed, it connotes the existence of risk and a protection against that risk. It is principally intended to be a contract of indemnity (except for life insurance), meaning that it is for the reinstatement of the insured to the original position he occupied before the loss.
Flowing from the above is the fact that the insured event must be an uncertain event, both as to its occurrence and its severity. Thus the insurance contract is termed aleatory, meaning it depends on chance or contingency. Secondly, the insured cannot make a profit from his loss. This fact is well illustrated in the words of Brett, L.J. in Castellainv. Preston in the following timeless words:
The very foundation, in my opinion, of every rule which has been applied to insurance law is this, namely, that the contract of insurance contained in a marine or fire policy is a contract of indemnity and of indemnity only,…and if ever a proposition is brought forward which is at variance with it, that is to say, which either will prevent the insured from obtaining a full indemnity or which gives the insured more than a full indemnity, that proposition must certainly be wrong.
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